Accounting Basics for Business: How To

Running a business means there are 594 things to do, and learning about the accounting basics can move towards the bottom of the list. But if you are determined to understand what accounting is, what the financial statements are and what they mean, and get on top of this topic this year, then you are in the right place. 

The main purpose of financial accounting is to prepare financial reports that provide information about a firm's performance to external parties such as investors, creditors, and tax authorities.   It can also very much be used for internal decision making which is when financial accounting overlaps with management accounting.

The Accounting Cycle

There are 8 steps, outlined in the above video that are known as the accounting cycle and happen whenever accounts are produced - this can be gone through monthly, quarterly and annually depending on reporting requirements for the business.

At the very least it is done yearly for the annual accounts and tax return submissions and it is a process that either you, if you are doing your own submission and reporting, or your accountant will go through to ensure your accounts and books are correct and complete.